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Yeah, I would certainly be hesitant to allocate a substantial portion of my money to a non-major-brand hedge fund or other investment vehicle. But, I don't hav

Yeah, I would certainly be hesitant to allocate a substantial portion of my money to a non-major-brand hedge fund or other investment vehicle. But, I don't have that kind of money to play with anyways, so I've haven't looked into it and can't make an accurate statement about why someone would choose a boutique investor.

abakker 9y ago
Hopefully everyone in this thread will take away that it is good to allocate at least some capital to basic, standard financial products through big-name companies like vanguard, schwab, etc. I mean, I'm not an investment advisor, but putting all your money in one account with one company and one strategy seems like a poor choice.
- troydavis 9y ago
  To distill this to a single piece of advice: every mainstream brokerage, private wealth management, or broker asset custodian[1] firm provides a Web interface with at least read-only access to balance and holdings. If you’re using an asset manager who hasn’t provided access (on a well-known domain name), find out why and get access. There’s no need to trust printed or static PDF statements. You should be able to see exact holdings as reported directly to you by a recognized name. [1]: Many smaller firms use Fidelity, Vanguard, Schwab, or another large firm as custodian: https://www.bogleheads.org/forum/viewtopic.php?t=170678 https://www.bogleheads.org/forum/viewtopic.php?t=170678, https://www.wallstreetoasis.com/blog/how-pwm-really-works-part-1-of-past-present-and https://www.wallstreetoasis.com/blog/how-pwm-really-works-pa...
  - jpatokal 9y ago
    If you're dealing with a scammer who's not afraid to blow $40k a pop on chartered jets, there's nothing stopping them from creating a pretty website that shows fake portfolios composed of real prices of real assets they haven't actually bought.
    - chii 9y ago
      so how does one protect oneself from these kinds of scams? how do i distinguish it from a legitimate find manager who actually performs as well as they claim?
      - troydavis 9y ago
        https://news.ycombinator.com/item?id=15991784 https://news.ycombinator.com/item?id=15991784 has more, but basically, get access to Web-based results from name-brand bank or custodian. A legitimate PWM professional will already be using a custodian bank (or will be employed at a large bank like UBS, JPM, or BoA, so you'll have access to their employer's site). Also, they'll appreciate that you're doing this due diligence. If you get any pushback, move on. Also worth noting that this problem is mostly moot for a typical retail investor who has assets at a name-brand brokerage like ETrade, Schwab, or TD Ameritrade, and already has self-service access to the bank/brokerage's site. At that point, an individual advisor might be able to make unilateral allocation changes, but the money's there and the bank will have a trading history. This problem in this article basically starts with trusting a lot of money to an individual or tiny firm, and that basically only comes up in PWM and non-traditional asset classes.
    - troydavis 9y ago
      I agree that electronic deception is a real risk, though I tried to cover this briefly with "on a well-known domain name." To be more specific, if the site isn't a name-brand PWM, brokerage, or custodian bank domain (examples: ubs.com, vanguard.com, fidelity.com), find out why. I agree that a site is easy to put up, but getting it on a domain name visited by hundreds of thousands or millions of people is not. (And yes, a few tiny PWM firms do use their own Web sites, and you should be much more skeptical of the data you're getting from a 6-employee firm's site). Get access to your custodial account at a name-brand firm's site, or change asset managers.)
- usrusr 9y ago
  There are two very different ways to fall into that one big bet investment" trap: The obvious one is greed, if you believe that you have found the best investment, why allocate funds to the second best. The less obvious one is all about UX: when people who don't consider wealth management their life's calling happen upon a fortune, they just want that money safely out of mind. And safely, to them, includes not causing unintended disagreements with the taxman. This requires keeping things simple enough to feel confident in being able to at least roughly understand what their professional advisors are doing. Obviously, an "all eggs in one basket" approach with a mainstream investment like a basic ETF would be the much lesser evil. But when people have a high base level of distrust in any wealth management professional this can easily blind them to the all-important difference between a regular whitehat tax advisor and a sleazy ponzi salesperson, making them the perfect mark for the latter.
- perl4ever 9y ago
  The thing is, if I won the lottery or something, so I had a truly massive amount of money, I would start thinking about the risks of just putting it in one broker, with one index ETF. You can always imagine another point of failure, and if you get carried away avoiding risk (or conversely simplifying your finances), "congratulations, you just played yourself".

abakker 9y ago

Hopefully everyone in this thread will take away that it is good to allocate at least some capital to basic, standard financial products through big-name companies like vanguard, schwab, etc. I mean, I'm not an investment advisor, but putting all your money in one account with one company and one strategy seems like a poor choice.

troydavis 9y ago
To distill this to a single piece of advice: every mainstream brokerage, private wealth management, or broker asset custodian[1] firm provides a Web interface with at least read-only access to balance and holdings. If you’re using an asset manager who hasn’t provided access (on a well-known domain name), find out why and get access. There’s no need to trust printed or static PDF statements. You should be able to see exact holdings as reported directly to you by a recognized name. [1]: Many smaller firms use Fidelity, Vanguard, Schwab, or another large firm as custodian: https://www.bogleheads.org/forum/viewtopic.php?t=170678 https://www.bogleheads.org/forum/viewtopic.php?t=170678, https://www.wallstreetoasis.com/blog/how-pwm-really-works-part-1-of-past-present-and https://www.wallstreetoasis.com/blog/how-pwm-really-works-pa...
- jpatokal 9y ago
  If you're dealing with a scammer who's not afraid to blow $40k a pop on chartered jets, there's nothing stopping them from creating a pretty website that shows fake portfolios composed of real prices of real assets they haven't actually bought.
  - chii 9y ago
    so how does one protect oneself from these kinds of scams? how do i distinguish it from a legitimate find manager who actually performs as well as they claim?
    - troydavis 9y ago
      https://news.ycombinator.com/item?id=15991784 https://news.ycombinator.com/item?id=15991784 has more, but basically, get access to Web-based results from name-brand bank or custodian. A legitimate PWM professional will already be using a custodian bank (or will be employed at a large bank like UBS, JPM, or BoA, so you'll have access to their employer's site). Also, they'll appreciate that you're doing this due diligence. If you get any pushback, move on. Also worth noting that this problem is mostly moot for a typical retail investor who has assets at a name-brand brokerage like ETrade, Schwab, or TD Ameritrade, and already has self-service access to the bank/brokerage's site. At that point, an individual advisor might be able to make unilateral allocation changes, but the money's there and the bank will have a trading history. This problem in this article basically starts with trusting a lot of money to an individual or tiny firm, and that basically only comes up in PWM and non-traditional asset classes.
  - troydavis 9y ago
    I agree that electronic deception is a real risk, though I tried to cover this briefly with "on a well-known domain name." To be more specific, if the site isn't a name-brand PWM, brokerage, or custodian bank domain (examples: ubs.com, vanguard.com, fidelity.com), find out why. I agree that a site is easy to put up, but getting it on a domain name visited by hundreds of thousands or millions of people is not. (And yes, a few tiny PWM firms do use their own Web sites, and you should be much more skeptical of the data you're getting from a 6-employee firm's site). Get access to your custodial account at a name-brand firm's site, or change asset managers.)
usrusr 9y ago
There are two very different ways to fall into that one big bet investment" trap: The obvious one is greed, if you believe that you have found the best investment, why allocate funds to the second best. The less obvious one is all about UX: when people who don't consider wealth management their life's calling happen upon a fortune, they just want that money safely out of mind. And safely, to them, includes not causing unintended disagreements with the taxman. This requires keeping things simple enough to feel confident in being able to at least roughly understand what their professional advisors are doing. Obviously, an "all eggs in one basket" approach with a mainstream investment like a basic ETF would be the much lesser evil. But when people have a high base level of distrust in any wealth management professional this can easily blind them to the all-important difference between a regular whitehat tax advisor and a sleazy ponzi salesperson, making them the perfect mark for the latter.
perl4ever 9y ago
The thing is, if I won the lottery or something, so I had a truly massive amount of money, I would start thinking about the risks of just putting it in one broker, with one index ETF. You can always imagine another point of failure, and if you get carried away avoiding risk (or conversely simplifying your finances), "congratulations, you just played yourself".